No. 94-379

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

IN THE MATTER OF

THE CONSERVATORSHIP OF:

ANDREW J. KOVATCH,

A Protected Person.

APPEAL FROM: District Court of the Ninth Judicial District,

In and for the County of Pondera,

The Honorable Marc G. Buyske, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Maxon R. Davis, Cure, Borer & Davis, Great Falls,

Montana

For Respondent:

Chris Christensen, Keil & Christensen, Conrad,

Montana

Submitted on Briefs: February 9, 1995

Decided: June 1, 1995

Filed:
Justice James C. Nelson delivered the Opinion of the Court.

The appellant, Ann Cogswell, appeals from an order of the

District Court for the Ninth Judicial District, Pondera County,

denying her petition to be appointed conservator for her father,

Andrew Kovatch. We affirm.

The sole issue on appeal is whether the District Court erred

in finding that Andrew's property is not being wasted or dissipated

and that appointment of a conservator for Andrew's estate is

unnecessary.

Ann Cogswell and Merrill Kovatch are the only children of

Andrew Kovatch, aged 88. Andrew, who has been widowed since 1990,

resides in a nursing home and is unable to manage his affairs and

property due to mental deficiency and physical illness or

disability. Andrew's principal asset is 1,480 acres of farmland in

Toole County of which 1,371 acres are enrolled in the Conservation

Reserve Program (CRP). The acreage was put into the program in

1988 and the income is split between Andrew as owner and Merrill as

operator with Andrew receiving $27,580.00 per year and Merrill

receiving $27,500.00 per year.

On February 1, 1991, Andrew granted Merrill a Power of

Attorney to handle all of Andrew's business affairs. Under the

authority of this Power of Attorney, Merrill pays Andrew's real

estate taxes and living and care expenses at the nursing home from

Andrew's checking account. In addition, Merrill has transferred

all certificates of deposit and stocks and bonds into joint tenancy

between Andrew, Ann and himself. Merrill has also made gifts on

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Andrew's behalf to Ann and himself.

On January 4, 1994, Ann filed a petition in District Court in

Pondera County to be appointed conservator for her father. The

petition specifically noted that the income from Andrew's cropland

in Toole County was being improperly diverted to Merrill by virtue

of Merrill having wrongfully listed himself as the operator of the

farm when it was enrolled in the CRP. Merrill filed an Answer and

Counter-Petition denying that the appointment of a conservator was

necessary and asserting his right to be appointed conservator for

his father.

At a hearing on June 6, 1994, an attorney appointed to

represent Andrew concluded that Andrew lacked the mental capacity

to handle his own affairs. Ann testified that she has not been

satisfied with the way her brother has been handling Andrew's

financial affairs. She contended that Merrill was not entitled to

half of the CRP income because he was not the operator of the farm

for the three years prior to the enrollment of the farm in the CRP

as required by the federal regulations governing the program.

At the hearing, Merrill testified that he is the operator of

the farm because he seeded the land with his own machinery, capital

and labor and he reports to the soil conservation service on an

annual basis. Merrill testified that the appointment of a

conservator was unnecessary because he has been managing his

father's property and handling his father's financial affairs under

the authority of the Power of Attorney since 1991. Merrill also

testified that he has kept his sister informed of the various

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transactions regarding their father's estate.

on June 9, 1994, the District Court issued its order denying

the appointment of a conservator. The court concluded that while

Did the District Court err in finding that Andrew's property

is not being wasted or dissipated and that appointment of a

conservator for Andrew's estate is unnecessary?

The

Montana.

(2)

appointment of a conservator is controlled by statute in

Sections 72-5-409(2) (a) and (b), MCA provide:

Appointment of a conservator or other

protective order may be made in relation to

the estate and affairs of a person if the

court determines that:

(a) the person is unable to manage his property

and affairs effectively for reasons such as

mental illness, mental deficiency, physical

illness or disability, advanced age, chronic

use of drugs, chronic intoxication,

confinement, detention by a foreign power, or

disappearance; and

(b) the person has property which will be wasted

or dissipated unless proper management is

provided or that funds are needed for the

support, care, and welfare of the person or

those entitled to be supported by him and that

protection is necessary or desirable to obtain

or provide funds.

Andrew could not manage his own affairs (satisfying the

requirements of 5 72-5-409(2) (a), MCA), there was not sufficient

persuasive evidence to meet subsection (2) (b) of the statute which

requires a showing that Andrew has property "which will be wasted

or dissipated unless proper management is provided. . . .'I

There is no dispute that Andrew lacks the capacity to manage

his property and affairs. However, this Court has previously ruled

that even though the person can be shown to be incapacitated,

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subsection (b) also requires a showing that the "person has

property which will be wasted or dissipated unless proper

management'1 is provided. See In the Matter of the Guardianship and

Conservatorship of Swandal (1984), 210 Mont. 167, 171, 681 P.2d

701, 703.

The District Court noted, that while Ann has no argument with

how Merrill has been handling Andrew's investment assets, questions

may have been raised concerning the competency of Andrew at the

time he entered into the agreement with Merrill and the legality of

the participation in the CRP under such an agreement. The court

concluded, however, that these questions did not rise to the level

of persuasive proof of mismanagement, waste or dissipation of

assets. Therefore, the court ruled that the second prerequisite

necessary to the appointment of a conservator had not been

satisfied.

In a non-jury trial, this Court will not disturb the district

court's findings of fact unless they are clearly erroneous. Rule

52(a), M.R.Civ.P.; Columbia Grain International v. Cereck (1993),

258 Mont. 414, 417, 852 P.2d 676, 678. Our standard of review for

questions of law is to determine whether the district court has

correctly interpreted the law. Steer, Inc. v. Department of

Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.

The District Court correctly concluded that there was

insufficient evidence presented by Ann at the hearing for a showing

that Andrew's estate is being wasted or dissipated. We therefore

affirm the order of the District Court denying the appointment of

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a conservator for the estate of Andrew Kovatch.
Justice W. William Leaphart, dissenting.

I dissent. The parties do not dispute that Andrew lacks the

capacity to manage his property and affairs. It is also undisputed

that Andrew has property. Nonetheless, the Court, citing In the

Matter of the Guardianship and Conservatorship of Swandal (1984),

210 Mont. 167, 171, 681 P.2d 701, 703, has upheld the District

Court's refusal to appoint a conservator because there was

insufficient evidence presented for a showing that Andrew's estate

is being wasted or dissipated.

It seems to me to be self evident that:

(a) property which is not properly managed will dissipate,

and

(b) an owner of property who is adjudged incapable, cannot

properly manage that property: therefore,

(c) property left in the management of an incapacitated person

will dissipate.

In other words, once a property owner is incapacitated what

more proof is needed in order to warrant appointment of a

conservator? In the present case, the District Court found that

Ann, the petitioner, had not produced persuasive proof of

mismanagement, waste or dissipation of her father's assets. The

law, however, does not impose such a burden. For obvious reasons,

the law does not require the court to wait until there has been

actual dissipation or waste. Rather, the law is prospective in

nature. The statute allows appointment of a conservator when the

person has property "which will be wasted or dissipated . . .I1

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Section 72-5-409(2) (b), MCA (emphasis added). The fact that the

property, with the help of friends or relatives, is not presently

being mismanaged, is not the issue. Rather, once a property owner

is shown to be incompetent to manage his/her property, it is

incumbent upon the court to appoint a conservator who is

accountable to the court rather than sit back and wait to see how

things develop under the watchful (and perhaps acquisitive) eye of

an unsupervised friend or relative. To the extent that it requires

proof of past or present waste or dissipation of assets, I would

reverse our holding in Matter of Swandal and reverse the lower

court herein for having incorrectly interpreted the law, i.e., §

72-5-409(2), MCA.

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